Suppose early Friday morning the economics club buys 200 donuts at 25 cents each, and plans to sell all of them later in the day on campus for 50 cents each
Only 60 donuts are sold at 50 cents, however, and by early afternoon the club is seen trying to unload the remaining donuts for 10 cents each. What can we conclude? A) The club was clearly engaging in predatory pricing of donuts.
B) The club was clearly selling below cost.
C) The club clearly misjudged the demand for donuts.
D) All of the above are true.
C
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The fact that a single-price monopolist must lower its price to sell more output explains why price exceeds marginal revenue
a. True b. False
The most appropriate countercyclical policy, or stabilization policy, in times of unemployment, according to classical economists, is for the government to
a. increase the minimum wage b. impose wage and price controls c. stimulate aggregate demand d. cut taxes e. do nothing